Beginner’s Guide Part 1: Getting Started and Choosing the Right Credit Card

Beginner’s Guide Part 1: Getting Started and Choosing the Right Credit Card

I got involved in collecting credit card miles/points when a family member introduced it to me. I was skeptical and nervous. Learning the ropes, like anything in life, takes time. For some, this is a second, full-time job. For most, it’s about finding the best possible deal and saving the most money to take trips one otherwise wouldn’t take.

Beginner’s Guide Part 1: Getting Started and Choosing the Right Credit Card

Three Types of Credit Card Miles & Points

There are three major miles and points currencies:

Transferable – This includes Chase Ultimate Rewards, American Express Membership Rewards, Starwood Preferred Guest points, and Citi ThankYou Points. All of these points can be transferred to a variety of airline or hotel partners. These types of points give you the greatest flexibility when redeeming miles with partners.

AMEX Mebership Rewards Transfer Partners

Airline/Hotel- This includes all the airline and hotel currencies that can redeemed for award flights or hotel nights. Airline points allow you to redeem that airlines currency for their own flights or partner award flights.

Delta miles that can be redeemed on Delta flights and Sky Team partners.

Fixed-value – This includes Barclay’s Arrival+, Citi ThankYou Points, US Bank FlexPerks and more. These currencies are fixed in the sense that you can redeem them towards travel at a fixed rate. Fixed-value points can be very useful for times when no flight or hotel awards are available.

*You’ll notice that Citi ThankYou points are listed under transferable and fixed-value. Citi ThankYou points transfer to various airlines, but you can also redeem them for travel through the ThankYou Portal. Your best redemptions through that portal will be on American Airlines.

Getting Started

If you’ve never had a credit card and need to build credit, try going with a no-fee credit card. Two of the best no fee cards are:

Chase Freedom – This card has rotating quarters (see quarterly calendar here) for a variety of purchases that earn x5 per dollar. These points can be redeemed for cash back, but if you are looking to travel, hold onto those points for when you have the Chase Sapphire Preferred. The points earned on your Freedom can transfer to your Sapphire Preferred which can then be redeemed for travel.

American Express Everyday – This card is great for everyday spending, offering you a 20% bonus on purchases (up to $6,000 per year) if you make more than 20 purchases a month. It also offers x2 points on groceries (up to $6,000 per year). Don’t be scared by the fact that this is American Express. Sure they still have the Platinum and Gold cards, but the Everyday card is their entry, no fee card.

If you have established credit (even just one card, a mortgage or an auto loan), and want to jump in, go for a transferable points card:

Chase Sapphire Preferred – Currently with an increased offer of 50,000 points, the Sapphire earns x2 points on dining and transportation (this includes subways, Uber/Lyft, gas and tolls). This card will you allow you to transfer your hard earned points to airlines like United, British and Southwest and hotels like Hyatt. This card and it’s partners will offer you tremendous flexibility.

Citi ThankYou Premier – This card is Citi’s response to the Sapphire Preferred, offering users 3x points on travel, including gas, 2x on dining out and entertainment, as well as the ability to transfer to some useful airlines like Singapore and Air France.

American Express Premier Rewards Gold Card – Rounding out the big banks, this is AMEX’s equivalent card which earns 3x on flights, 2x on supermarkets, gas and restaurants, and the ability to transfer points to many airlines including Delta, Singapore, El-al and Air France.

With all these cards, some transfers are better than others and will depend on where you want to go. Subsequent Beginner’s Guides will detail some of the best uses of different currencies depending on where you want to travel to.

Once you’ve picked up one of these cards, you can get into specific airline and/or hotel currencies

Sign-Up Bonuses

The coveted 100,000 AMEX Platinum Offer

A sign-up bonus is the promotional offer the bank is using to encourage you to apply for their product. More often than not, the earning of a sign-up bonus is dependent on spending a certain amount of money within 3 months from approval date of the card (sometimes it can be 4 or 5 months). The spending requirement, or spend hurdle, can range anywhere from $750 – $20,000, with most falling on the lower end of that range.

After you satisfy the sign-up bonus requirements by spending the designated amount of money, you’ll have a nice, fat pile of fresh points or miles. Sign-up bonuses typically range from 25,000 – 50,000, but can go as low as 10,000 or as high as 140,000 points.

Sign-up bonuses are always important as they can be a great way to boost or start off your miles and points balance.

Which card is right for me?

The credit card travel rewards market is a crowded space. Luckily for you, the savvy consumer can take advantage of the best offers. The banks are working hard to make sure that their card is the first one you go for everytime you make a purchase.

Everyone has their own travel goals and different cards will suit users differently. When you reach for a card in your wallet, try to use the one that will earn the greatest return. (NOTE: This does not include business cards.)

Here’s a matrix by spending category and/or type of card.

Category

Card

Groceries

Gas

Transportation

Air Travel

Hotel

Dining

Entertainment

Chase Sapphire Preferred

2x

2x

2x

2x

Chase Freedom

Quarter 2: 5x

Quarter 1: 5x

Quarter 1: 5X

Quarter 3: 5x

Citi Prestige

3x

3x

3x

3x

2x

2x

Citi Premier

3x

3x

3x

3x

2x

2x

AMEX Everyday Preferred

3x

2x

AMEX Premier Rewards Gold

2x

3x

2x

If you have a rough estimate where you do most of your weekly spending, the above matrix can help you decide which card to use to maximize your rewards.

What about the hotel and airline cards?

Hotel and airline cards are a staple for anyone getting involved in the earning of miles in points. However, for your everyday spending, they tend not to offer more than 1x per dollar spent. The above cards will generally earn you more than that on your typical, everyday spending.

The one exception to this is that if you’ve signed up for a hotel or airline card and need to reach a spending requirement for the sign-up bonus, you should probably be using that card.

What’s Coming Next:

Here’s a brief summary of what other guides you can expect to read in the coming weeks: